1. Iron Man 2 killed off a villain (albeit a minor one) that could be used in future films/tv series, even if just as a part of a larger group of villains. Why kill a character off for good when you just introduced them?

Because that's what happens in movies. Besides, he isn't really killed off if you're bringing him back. It's not like Iron Man is running out of villains to beat up.

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2. The moniker of "Whiplash" has been used by several different people in the comics. Why not embrace that tradition in the MCU?

Because you don't have to. If the character was not very compelling the first time around, bringing him back won't fix that problem.

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3. Many would argue that Ivan Vanko was hardly even a very good representation of the character. He was more of a bizarre amalgamation of the Crimson Dynamo and Whiplash. Why not give the character another shot with a more comic-faithful representation?

Because most people don't know better. Besides, Whiplash is not a very good villain. He is extremely limited in what he can do. Just watch IM2's final fight, all he does is stand there between Tony and Rhodey using his whips. The whips are a cool idea but he's boring as a fighter when matched against Iron Man.

Tell me how we can stay faithful to Whiplash's character and make him a better fighter and you might be on to something. All you have done is introduce the same character, with the same limitations, with a different backstory. The character in the suit actually has less substance to his character than Vanko did making him even more boring than Vanko was.

Ultimately the question is, what is the compelling reason to bring back this character rather than introducing a new one?

Note: I'm not trying to tear you down, in fact I love reading ideas like yours. You certainly have a workable starting point, but I think you need a better villain. In fact, your antagonist could almost be viewed as an anti-hero going up against the Maggia.